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wrote...
Posts: 71
2 weeks ago
Describe the main factors economists believe cause inequality of income.
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Microeconomics
Edition: 7th
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Posts: 55
2 weeks ago
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The distribution of income is based mainly on the marginal revenue product of the factors owned by households, according to the marginal productivity theory of income distribution. Therefore, the causes of income inequality are very complex. Income inequality is determined by the quantities of factors owned by households (including labor, capital, and natural resources) and the prices of these factors of production (which are determined by the interaction of demand and supply). Income inequality is believed to have risen in the past three decades because the wage rates earned at the top end of the income distribution have risen in comparison to those at the bottom end, largely because of the effects of technological change and the globalization of markets. Government policies, especially those dealing with taxes and transfers, also have an effect on income inequality.
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